Coronavirus and Tax Day - New Deadlines.
Image by Mohamed Hassan from Pixabay
COVID-19 crisis sheds more light on the work of financial translators
On March 27, The House of Representatives convened to discuss a stimulus bill and urgent response to the COVID-19 pandemic, which passed the Senate by unanimous consent. The stimulus bill - the Coronavirus Aid, Relief, and Economic Security (CARES) Act - will act according to some key provisions; some billions of dollars will go towards loans and grants to large companies; some money will assist smaller businesses; a portion of the sum will be for individual tax rebates, and some for expanded and extended unemployment benefits.
Some of the key provisions of the CARES Act and the issues recently updated by the Internal Revenue Service (“IRS”) will affect taxpayers of all kinds - individuals and businesses - requiring an immediate attention, and for which immediate action must be taken.
Therefore, the wide-ranging market for financial service providers has emerged, more than ever before, because of the need to prepare, advise and act on behalf of their clients according to the changes and guidelines - for the benefit of all involved.
The COVID-19 also seems to have shed some light on the 'gray area' of the hard, professional financial translators, as well as increasing their value way beyond them just sitting at their desks, dealing with lackluster tables, financial statements and a myriad of numbers.
During this present time, they must all be able to collaborate, working at full steam to get the mass of work done properly, at the highest level of quality, while still meeting the tightest of deadlines.
The CARES Act - Tax Strategy change in a “Time of COVID-19”
- Direct payment to US citizens - taxpayers will receive a one-time direct deposit, with limitation per income, as follows (based on Adjusted Gross Income according to the most recent tax return):
1. Single – Up to $75,000 2. Married filing separately – up to $75,000 3. Head of a household - up to $112,500 4. Married filing jointly – up to $150,000
*Once the income has reached these sums, the amount of credit will be reduced by 5% over the limitation.
- Extension of Filing and Payment Deadline for Federal Income Tax where relevant state income, franchise tax filing, and payment deadlines may differ.
- Corporate Alternative Minimum Tax Relief. - Stimulus Payments - the government will mail checks to taxpayers using the information provided on their 2019 tax return.
- Charitable Contributions - to encourage charitable donations the government included a provision that creates a new partial above-the-line deduction for cash contributions up to $300 for certain charitable organizations. In addition, taxpayers who itemize their deductions can deduct up to 100% of their AGI for charity, with the excess carrying forward for five years. This applies to the 2020 tax year.
- Self-Employment Tax - self-employed taxpayers can defer 50% of the employer share of their SE tax (6.2%) due with their 2020 tax return – half of which until the end of 2021, and the other half until the end of 2022.
- Early Distributions of Retirement Funds - up to $100,000 of early distributions (before age 59.6) from retirement plans will be exempt from the 10% early-withdrawal penalty tax if they are “Coronavirus-related,” i.e.; if you or your spouse/dependent were diagnosed, or if you suffered financial ramifications (lost your job/were quarantined/work hours reduced/had no childcare).
One of the key components of the CARES Act is also the Paycheck Protection Program for small businesses and startups. The aim is to provide them with business loans through approved lenders under favorable terms. The program is only for self-employed individuals and businesses, nonprofit organizations, veterans’ organizations, or Tribal businesses with 500 employees or less.
** It is advisable to consult with financial experts for further changes and updates.
The table shows the key 2020 CARES Act provisions.
© Michael E. Kitces's note: Since the publishing date of his article, additional guidance has been released on certain provisions.
Who is eligible for stimulus funds from the federal government?
* All legal US residents who are not claimed as a dependent or eligible to be claimed as a dependent on the tax return of another individual, and is not able to earn over a certain sum.
* US Citizens and Resident aliens who have a valid Social Security number.
* US citizens living outside the US are also eligible.
The new instructions have created a lot of work for law firms, big accounting organizations, and multinational financial and strategic consulting providers. This greatly increased the need for large quantities of translated documents includes, inter alia, tax forms, financial statements, official and personal papers with updated details as bank account and address that all had to be completed and submitted to official institutions such as the IRS - especially for their clients (U.S. citizens who live and work in other countries.)
In the current climate, nearly all official institutions are closed and they are accelerating the launch of the "personal and business area" which offers key online services to provide remote solutions and services. However, the plan 'Shift to Digital’ doesn't necessarily help, and this is where the ‘Supply and Demand’ economic model comes into the picture, meaning that there is now a great demand for financially qualified translators.
Trusted translators for the Financial Services Industry
The field of Finance is a language unto itself. It is not just about tables, a few words and a lot of numbers. A good financial translator must be qualified enough to understand the story behind the numbers, and what a financial statement tells him about a company.
For financial transactions and other projects, it is essential to hire a professional, highly-skilled financial translator, so that all of the documents will convey the accurate intent and wording of the original document with zero errors.
Professional Financial translators must have extensive knowledge in the field of Finance; familiarity with the concepts of the financial world and have an Academic education supported by recognized official certificates, and not just be ‘familiar’ with both languages. They must have the ability to properly translate the full intent of the original document and convey it accurately into the target language, within a tight deadline.
Certified financial translators can also improve the quality and content of materials they work on and may sometimes find mistakes or typographical errors, so you know there is another pair of eyes to rely on. They must be capable of translating a variety of financial documents; personal and business documents, financial statements, annual reports, regulations and guidelines, contracts and agreements and much more.
While the COVID-19 crisis is still underway, it has already created some changes in the tax system and like a snowball, it increased the demand for certain professionals, amongst them are the financial translators in a variety of languages. Bad numbers are sometimes the result of inaccurate financial translations that lead to bad decision-making. Therefore, working with qualified translators is a valuable asset in the implementation of the tax change.
You don't really want to know how much a small mistake can cost you. #TaxDay #Finance #COVID-19 #translations #CARESact #Taxation